CMS: Insurers ‘bolting’ from ObamaCare exchanges

July 12, 2017

There’s been a dramatic drop in the number of insurers filing initial applications on the Affordable Care Act (ACA), according to the Centers for Medicare and Medicaid Services (CMS).

The agency reported Monday that 141 qualified health plan issuers had filed applications for the 2018 plan year on the federally-facilitated exchange platform, compared with 227 issuers at the the initial filing deadline for 2017, representing a 38% drop in filings.

“This is further proof that the Affordable Care Act is failing,” said CMS Administrator Seema Verma in a press statement. “Insurers continue to flee the Exchanges, causing Americans to lose their choice for health insurance or lose their coverage all together. These numbers are clear: the status quo is not working.”

Submissions were tallied from 39 states that use the Federal Exchange eligibility and enrollment platform, the statement noted, adding that “CMS expects this number to fluctuate over the next several months as it has in past years. Rates will be finalized by mid-August.”

A White House press release echoed CMS’ concern about the “alarming rate” of insurers “flee[ing] Obamacare.”

“With only half the number of issuers wanting to sell Americans plans on Obamacare’s exchanges today than just two years ago, it is now more clear than ever that Obamacare’s collapse is accelerating and that the American people need real reform. With costs out of control and choices continuing to dwindle, now is the time for Congress to act,” the release stated.

The CMS numbers “look right, based on what we’ve seen and what we’ve heard,” commented Chris Sloan, senior manager for Avalere, a healthcare consulting firm. However, he noted that Avalere does not track participation in every state.

Sloan suggested that there were a number of reasons fewer insurers have submitted applications. “It’s an expensive market; the people in it are expensive, they use a lot of healthcare, and some carriers have said ‘We don’t think we can manage this population,'” Sloan told MedPage Today. “You’ve got the normal traditional market factors of it not being a very attractive market, and then couple that with everything that’s happening politically, and that’s kind of where we are today.”

What’s happening politically, of course, is that 2018 is less than 6 months away and there remains no clear consensus in Congress on how or even whether to repeal or replace the ACA. Mid-August now appears to be the earliest date for passage of legislation.

The uncertainty around cost-sharing reduction payments — subsidies built into the ACA that lower the amount certain individuals must make towards deductibles, copayments, and co-insurance — and the question of whether the ACA will even exist in 2018, has added to insurers’ reticence to file, Sloan explained.

Other healthcare policy experts were more blunt about whom to blame for the dropout rate. “It’s kind of ironic that CMS would release something saying that participation is down when they are themselves causing most of the problems,” Joel Ario, JD, managing director for Manatt Health, told MedPage Today.

However, Ario, a former state insurance commissioner for Pennsylvania and Oregon, stressed that the absolute numbers aren’t the full picture. “The raw number of 141 [applications] doesn’t tell you a lot … until you know how big a footprint each of those carriers offers,” he said.

To support his argument that the administration has a role in the current market instability, Ario highlighted an analysis from Oliver Wyman Health, “a virtual community of innovators” for the consulting firm. The analysis estimated two-thirds of rate increases in 2018 are driven by political uncertainties around cost-sharing reduction (CSR) payments and around individual mandate enforcement, as both the Senate and House repeal-and-replace bills would eliminate the individual mandate.

Not enforcing the individual mandate could make healthier individuals less inclined to buy coverage and negatively impact risk pools, according to the analysis, and could “contribute about 9% to premium increases.” However, the group’s analysis also noted payers’ estimates could range from “no impact at all to 20% or more.”

Regarding the uncertainty of CSR payments, Wyman estimated payers would have to increase premiums by 11% in most markets — but potentially by more than 20% — “depending on the extent to which insureds are eligible for CSR policies.”

Ario noted that there is usually some attrition in filings between the initial deadline and actual open enrollment — “how much will depend on the politics.”

America’s Health Insurance Plans (AHIP), the industry’s major trade group, declined to comment on the press release and figures. But it had warned twice in May — in a press statement and again in a letter to Senate leaders — that continuing uncertainty about the exchange markets would keep many insurers from committing to them.

“[I]n light of 2018 filing deadlines, most of which fall on or before the June 21st deadline for federally facilitated marketplaces, health plans have only a few more weeks to decide whether and how to participate in this market. In several states, the deadline to file products and initial rates has already passed … Congress must take action now to fund CSR payments,” wrote AHIP on May 19.

In the May 4 press release, AHIP also noted that the Republican healthcare legislation would not come soon enough to stabilize the market.

“Immediate challenges exist in the individual market today, and the bill [the American Health Care Act] includes key provisions to stabilize the market in 2018 and 2019. We need certainty now about funding for cost-sharing reductions that lower copayments for patients so they can better afford to get care from their doctor.”

AHIP called for quick action from the Senate in order to gain certainty about Medicaid coverage because “we need to give people more time to adjust — and more time for the individual market to stabilize.”

Health plans have until September to decide once and for all whether to participate.